Bitcoin
Bitcoin lags behind stocks and bonds in Q2 2024
Analysts have signaled that Bitcoin has failed to deliver in the second quarter of 2024, lagging behind stocks and bonds in terms of performance.
According to Bloomberg, Bitcoin underperformed compared to global equities, fixed income and commodities this quarter. The leading cryptocurrency lost approximately 5% from the beginning of April to mid-June.
After reaching a high of $73,798 in March, attempts to return to the position failed to achieve.
In the previous quarter, Bitcoin soared 67% in the three months to March. Massively outperforming traditional asset indices.
One of the main reasons that drove the change was the fashion around the approval of US Bitcoin Exchange Traded Funds (ETFs). However, that enthusiasm appears to be fading, according to Noelle Acheson, author of the Crypto Is Macro Now newsletter.
Acheson believes the inflow of new funds into Bitcoin ETFs has slowed. She attributed most of the recent inflows to existing Bitcoin holders, adding that “only new money will move the price.”
Raising more than $15 billion to date, Bitcoin ETFs have been one of the most coveted investment vehicles on Wall Street.
JPMorgan Chase strategists noted that there has been a rotation of funds from digital wallets on exchanges to new ETF products. With this in mind, they estimated this year’s net flow into cryptocurrencies, including ETFs and other sources, at $12 billion.
The estimate is much lower compared to the 45 billion dollars recorded in 2021 and the 40 billion dollars in 2022.
As a result, strategists concluded that they remain “skeptical” about the continuation of the pace of inflows until the remainder of 2024.
Acheson further estimates that Bitcoin miners may have contributed to the cryptocurrency’s poor performance.
Miners have been selling their cryptocurrency holdings to stay afloat. With the April halving, there was a considerable drop in profitability. The current halving has reduced the block reward from 6.25 BTC to 3.125 BTC.
In May, crypto mining analytics firm Hashrate Index Revealed that miners would face a “strong upward difficulty adjustment” in the coming months. Before that, research firm Kaiko had warned of imminent selling pressure from miners.
“If miners were forced to sell even just a fraction of their holdings next month, it would have a negative impact on the markets,” the company wrote at the time.
Despite the drop in performance, some analysts remain bullish on Bitcoin.
As reported by crypto.news, analyst CryptoCon predicted a year-end price target of $91,539 for the debut cryptocurrency. Michael Novogratz of Galaxy Digital speculates a similar range of $100,000.
Meanwhile, Cathie Wood of Ark Invest has the most bullish outlook, having raised her long-term price target for Bitcoin to a whopping $3.8 million.